WASHINGTON — In real estate, it's all about location, location,location.But as credit unions and other financial service providersawaited a draft of the Senate regulatory restructuring, a keynegotiator of the bill said when it comes to a new consumer agency,location is less important than teeth.

Sen. Bob Corker (R-Tenn.) said last Thursday that members of hisparty don't want a final bill in which consumer protection wouldtrump safety and soundness concerns and that he and Senate BankingCommittee Chairman Christopher Dodd (D-Conn.) had reached agreementon placing the new consumer regulator inside the Federal Reserve.Dodd was planning to unveil legislation on his own, withoutRepublican co-sponsors on Monday March 15.

Corker said the compromise involved broad rulemaking authorityfor the new regulator, but the enforcement would be done by theprudential regulator. If the consumer regulator has concerns abouta financial institution's practices, they could send arepresentative to the examination being conducted by the safety andsoundness regulator, such as the NCUA.

Corker said at a panel discussion last Wednesday sponsored byThe National Journal, “You can't have multiple people dealing withfinancial institutions and giving them mixed signals.”

Fellow Banking Committee Member Mark Warner (D-Va.), who wasalso on the panel, agreed with Corker that it is less importantwhere the new agency is located. Warner said he hopes the newlegislation should be comprehensive and said lawmakers are “notsimply going to fix the last crisis.”

Both lawmakers agreed that the Federal Reserve didn't do enoughin the area of consumer regulation in the past.

Warner also said the section of the legislation dealing with howto deal with troubled institutions deemed too big to fail should bestructured in a way that having the government come in and rescuethe company “ought to only be a last resort.”

During a second panel discussion, CUNA President/CEO Dan Micaand Independent Community Bankers of America President/CEO CamdenFine agreed that having a few large financial services firmsdominate the market is unhealthy.

Mica said the concentration issue needs to be looked at butnoted that with approximately $900 billion in assets, all creditunions are smaller than any one of the big banks.

Fine said any changes to the regulatory landscape must helpsmall institutions more.

He noted that when he ran a community bank in Missouri he had tofill out a 57-page compliance questionnaire from the Fed. He notedthat all the time small institutions spend on compliance takes timeaway from their ability to provide one-on-one service to theircustomers. He also said that the exam process needs to beharmonized because the safety and soundness and consumer protectionobjectives are often in conflict.

Travis Plunkett, the top lobbyist for the Consumer Federation ofAmerica, said “safety and soundness concerns, always trump consumerconcerns.”

He said because many of the problems during the financial crisiswere caused by large banks and nonbanks, he hopes the legislationwill focus on “broad rules that nobody is exempt from.”

In a subsequent interview with Credit Union Times, Finesaid while he expects credit unions to try to attach a provisionraising the cap on member business lending to the regulatoryrestructuring bill, his group will fight that effort strongly.

“We want to be sure that lawmakers know about the poorfourth-quarter results of credit unions. This shows they are havingproblems with the loan portfolios they have,” he said.

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